Uber Loses as New York Becomes First Major US City to Cap Ride-Hailing Drivers
Yesterday, New York City took a big step toward regulating Uber, Lyft and other ride-hailing companies. The city council passed legislation that will cap the number of for-hire vehicles in addition to a bill that will create a minimum pay rate for drivers.
It's huge blow to ride-hailing companies in one of the most profitable US markets. New York was becoming inundated with for-hire vehicles, with the number of cars growing drastically over the last few years. In 2015, the last time similar legislation was proposed, there were 63,000 for-hire drivers — thats now ballooned to more than 100,000.
Many city officials blame the services for the increasing traffic gridlock in Manhattan. The MTA, which oversees NYC's public transit, has also seen a serious decline in ridership over the last few years. It's unclear if that has something to do with the increased availability and convenience of ride-hailing services or the deplorable mismanagement the city's subway system.
"We are pausing the issuance of new licenses in an industry that has been allowed to proliferate without any appropriate check or regulation," City Council speaker Corey Johnson said, according to The New York Times.
Uber and Lyft opposed the legislation saying it would lead to higher prices, longer wait times and fewer transportation options for New Yorkers, especially for those who don't have easy access to public transit.
"These sweeping cuts to transportation will bring New Yorkers back to an era of struggling to get a ride, particularly for communities of color and in the outer boroughs," Joseph Okpaku, a vice president at Lyft, said in a statement.
The law will only pause the issuance of new licenses for one year (with the exception of wheelchair-accessible vehicles) and the city's taxi commission has the ability to issue new licenses if it sees a real need for it. The city will study the impact of ride-hailing vehicles during the year-long hiatus.
"More than 100,000 workers and their families will see an immediate benefit from this legislation," said New York City Mayor Bill de Blasio. "And this action will stop the influx of cars contributing to the congestion grinding our streets to a halt."
Driver pay has been brought to the forefront after six for-hire drivers committed suicide in recent months, with some of them citing financial troubles as to why they took their own life. Studies show that ride-hailing vehicles sit empty in New York about 40% of the time while they are working.
Because Uber drivers are considered independent contractors, they don't qualify for a minimum wage, but the new law will establish a "floor" for what drivers can earn. Quartz reports that a formula created by economists James Parrott and Michael Reich will likely be implemented by the city. It "adjusts drivers' pay based on how much work they get overall, with the goal of paying them $17.22 an hour, or $15 an hour after expenses like gas."
Critics say that the cap won't fix the traffic problem with many suggesting congestion pricing in place, a solution backed by New York Governor Andrew Cuomo.
The debate took on many aspects, including a racial one. Civil rights advocate Reverend Al Sharpton said that the legislation will make it harder for people of color to get a ride, arguing that yellow cab drivers already discriminate against minorities.
The legislation will take effect immediately once Mayor de Blasio signs the new law. The regulation may also serve as a framework for other cities to slow down ride-hailing companies explosive growth.
TPG featured card
at American Express's secure site
Terms & restrictions apply. See rates & fees.
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 5X | New! Earn 5X Membership Rewards® points on prepaid hotel stays booked through AmexTravel.com or the Amex Travel App. |
| 3X | Earn 3X Membership Rewards® points on flights booked through AmexTravel.com, the Amex Travel App, or purchased directly from airlines. |
| 2X | Earn 2X Membership Rewards® points on prepaid car rentals booked through AmexTravel.com or the Amex Travel App and cruises booked and paid through AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Pros
- Valuable dining and food-related credits
- Flexible rewards with airline and hotel transfer partners
- Multiple travel and purchase protections
- No foreign transaction fees
- Access to Amex Offers for additional savings (enrollment required)
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $8,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- New! Earn 5X Membership Rewards® points on prepaid hotel stays booked through AmexTravel.com or the Amex Travel App.
- Earn 3X Membership Rewards® points on flights booked through AmexTravel.com, the Amex Travel App, or purchased directly from airlines.
- Earn 2X Membership Rewards® points on prepaid car rentals booked through AmexTravel.com or the Amex Travel App and cruises booked and paid through AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- Pay It® lets you tap in the American Express® App to quickly pay for small purchase amounts throughout the month and still earn rewards the way you usually do. Plan It® gives you the option to split up big purchases into equal monthly payments with a fixed fee. You’ll know upfront exactly how much you’ll pay.
- Updated! $120 Dining Credit: Earn up to a total of $10 in statement credits monthly when you pay with the Gold Card at Grubhub (including Seamless), Buffalo Wild Wings, Five Guys, The Cheesecake Factory, and Wonder. This can be an annual savings of up to $120. Enrollment required.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year at over 10,000 qualifying U.S. Resy restaurants after you pay for eligible purchases with the American Express® Gold Card. That’s up to $50 in statement credits semi-annually. Enrollment required.
- $84 Dunkin' Credit: Earn up to $7 in monthly statement credits after you pay with the American Express® Gold Card at U.S. Dunkin’ locations. Enrollment required.
- $120 Uber Cash on Gold: Enjoy up to $120 in Uber Cash annually with your Gold Card. Just add your Card to your Uber account and you'll get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an Amex Card for your transaction.
- New! As an American Express® Gold Card Member, you can enjoy complimentary Hertz Five Star® Status. Enjoy benefits like skipping the counter at select locations, adding an additional driver at no additional cost*, and vehicle upgrades**. Benefit enrollment and Hertz Gold+ registration are required. *Additional drivers must meet standard rental qualifications and must be a spouse or domestic partner to qualify as complimentary. Other additional drivers subject to fees. **Benefits are subject to availability and vary by location. Additional Hertz program Terms and Conditions including age restrictions apply.
- Take advantage of a $100 credit towards eligible charges* at over 1,300 upscale hotels worldwide when you book The Hotel Collection through AmexTravel.com or the Amex Travel App **. *Eligible charges vary by property. **The Hotel Collection requires a two-night minimum stay.
- Book your travel through the Amex Travel App with added peace of mind – backed by American Express® service and support. Only for American Express® Card Members.
- Whenever you need us, we're here. Our Member Services team will ensure you are taken care of. From lost Card replacement to statement questions, we are available to help 24/7.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.